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Corporate Office, The “Contrarian Investor”

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According to a recent report released by analyst firm, BTIG, the greater Washington, DC area remains a challenging market for office landlords. Readily available financing and strong investor demand for “trophy” office product has created a wave of new supply that far outpaces demand, says the report.

But BTIG expects class A office supply to increase 3% annually between 2018 and 2020 while tenant demand growth has averaged only 1% over the past three years. “Corporate Office is the contrarian investment in an otherwise challenged DC office market,” the firm’s report says.

The REIT, BTIG says, focuses on the growing defense/IT sector, owns properties in markets with limited-to-no new supply, and “stands to benefit from the DoD’s migration to cloud computing.”

In Q1, the firm tightened its 2018 guidance and maintained the mid-point at $2.00 and BTIG said at the time that it expected the REIT to benefit over the long-term from higher defense department spending, and value creation from its development platform.